In the program, you will enter info in the 1099-R section. Here are the steps:
In TurboTax Online,
If you are under age 59 1/2, the distribution from the IRA is considered as an early withdrawal. Generally, you will pay both regular tax and an additional 10% penalty of your entire distribution unless you met certain criteria. Due to the Section 2202 CARES Act, if your IRA distribution is related the Covid-19, you will not be liable for this additional penalty. You will still pay the normal taxes like your wages and income. For more information from the IRS, click here: Covid Relief. If your distribution is not related to the Covid, you will need to pay the penalty.
My customer selected the Covid relief option and is still being charged the 10% penalty. Can we update this article with instructions on how the customer can avoid this? Please and thank you!
When i enter my early withdrawal info I'm still being charged the extra tax penalty. When will the program be updated?
You will report this on a Form 8915-E. The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act. So this form cannot be included in the TurboTax program. You will not be able to proceed until the form is available.
The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.
We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.
IRS forms availability table for TurboTax individual (personal) tax products
Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.
Please sign-up here and we will email you once the form is live.
@Melissakay1 wrote:
When i enter my early withdrawal info I'm still being charged the extra tax penalty. When will the program be updated?
Checking the COVID box will (when the program is updated) bring up a new screen with additional questions. However, that part of the program isn't ready. I suggest deleting the 1099-R and waiting for the program to be ready, then re-enter it.
@baumer77 wrote:
Are we still waiting on an update on this?
Anyone?
Form 8915-E for Covid-related distributions is scheduled to be ready on 2/24. However, sometimes updates are applied in the afternoon or evening, so don't get frustrated if it's not ready at 6am. (Plus, Turbotax is on Arizona time.)